Will This Deal Keep J.Jill Alive?

Like many retailers, J.Jill Inc. (NYSE: JILL) has been brutalized by the COVID-19 crisis and has drawn down on its credit facilities to stay afloat. An update of its financial situation to investors suggests that things may be looking up, and that made the stock one of Tuesday’s biggest winners.

The company announced early on Tuesday that with the support of a majority of its shareholders, it has entered into a transaction support agreement with lenders holding greater than 70.0% of the company’s term loans on the principal terms of a financial restructuring. Ultimately, this would result in a waiver of any past noncompliance with the terms of the company’s credit facilities and provide the company with additional liquidity.

If the transaction is consented to by the requisite term loan lenders, it will be consummated on an out-of-court basis. The out-of-court transaction would extend the maturity of certain participating debt by two years, through May 2024. This would enable J.Jill to strengthen its balance sheet and better position itself for long-term growth.

If the transaction does not receive the required consents, the parties to the agreement have agreed to a prepackaged plan of reorganization under Chapter 11.

Separately, the company announced that it had extended the forbearance period to September 26, 2020, providing additional time for J.Jill and its lenders to complete negotiations. Specifically, the company entered into the two existing forbearance agreements, as amended on July 29, 2020, with the lenders under its ABL and term loan credit facilities.

Under the amendments to the existing forbearance agreements, the respective lenders have agreed not to exercise any rights and remedies until September 26, as long as the company remains in compliance with its credit facilities and complies with the terms of the forbearance agreements.

J.Jill stock traded up about 85% to $0.71 on Tuesday, in a 52-week range of $0.31 to $2.58. The consensus price target is $0.64.